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Competitiveness in Services, Driving Force of Economic Development

Author

Listed:
  • Ramona Pîrvu

    () (University of Craiova, Romania)

  • Maria Danatie Enescu

    () (University of Craiova, Romania)

Abstract

The competitiveness of a nation is ensured by the profitable activity of firms. They strengthen their position in the domestic and international markets through global strategies whose purpose is to increase productivity and maintain it at a high level. For this, the company must take into account both the internal economic environment which ensures operating conditions and the external economic environment’s development. The five competitive forces determine the industry’s profitability because they configure firms’ selling prices, production costs and investments needed to be competitive in the field. The threat of new competitors limits the potential profit since they involve new production units and the opportunities for market expansion. Economic strength of the buyers and bidders attracts profits to them. Rivalry among existing competitors erodes profits by increasing costs of competition (like advertising, selling expenses or those required for research and development). The presence of substitutive goods or services limits competitors’ prices through buyers’ transfer phenomena limiting and eroding market share of industry / firm in the total production output.

Suggested Citation

  • Ramona Pîrvu & Maria Danatie Enescu, 2012. "Competitiveness in Services, Driving Force of Economic Development," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 12(4), pages 203-210.
  • Handle: RePEc:pet:annals:v:12:y:2012:i:4:p:203-210
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    References listed on IDEAS

    as
    1. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, pages 23-44.
    2. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, pages 485-512.
    3. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, pages 485-512.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    services; development; competitiveness;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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